Weekly Feed Market Commentary

Published 26 November 14

Feed Grains

Grain markets continued their rally through the past week. At Tuesday’s (25 November) close, May-15 UK feed wheat futures had reached £135.40/t, up £4.15/t week-on-week; this is highest settlement price since mid-July. For the May-15 futures, moving above the £130/t price level is important as it represents the plateau of the market through much of August, before the depression in September. For a second successive week, Paris Mar-15 maize futures climbed by less, adding €2.25/t on the week, closing at €156/t on Tuesday.

The reluctance of farmers to sell across the world, early new crop weather fears and re-alignment of speculative traders, have all contributed to the recent rally. However, global grain supplies remain fundamentally strong this season and must not be ignored as they represent a risk to the price rally.

Demand for EU wheat has continued to progress ahead of last year’s pace over the past six weeks, with EU export commitments now totalling 11.5Mt as at 19 November, 8.4% up year-on-year. Part of the price support in recent days can be attributed to this fast pace of EU wheat export licence granting, but the EU Commission, USDA and IGC all currently forecast total season exports to be lower year-on-year. It is very possible that export estimates will need to be raised, reducing the size of ending stock forecasts. However, with export commitments for barley, maize and oats lagging behind last year’s export commitments, not all grains are showing the same export strength as wheat.

Protein Meal

Rapemeal (Ex-mill Erith, November delivery) also reached its highest price level since mid-July, increasing £3/t from a week earlier to reach £173/t on Friday. Chicago nearby soyameal futures fell slightly on the week to Friday to $417/t from $419/t, although the price has since risen strongly, reaching $431/t at Tuesday’s close.

Drier than usual weather conditions in South America have been stalling Brazilian soyabean planting progress, and remain a key focus for the market. It is expected that this will delay harvesting due to the short growing season, which could tighten supplies in early 2015. Brazil’s oilseeds crushing industry association, Abiove, have indicated that harvest could suffer delays of 20 to 30 days depending on climatic conditions in the next few weeks.

The Australian Bureau of Meteorology has upgraded the possibility of an El Niño weather event occurring from 50% (WATCH) to 70% (ALERT) via their El Niño / La Nina tracker. Although the market has sometimes been unsure how to price this in, El Niño conditions could bring welcome precipitation to South America.

Figures and commentary provided in association with HGCA and BPEX.

For further information on the cereals market click here to link through to HGCA website.